The Greater Boston housing market may have experienced a temporary slowdown in sales, but it remains a competitive and resilient market. The lack of available listings continues to drive prices to record highs, making it an advantageous time for sellers. As buyer interest remains steady, real estate professionals need to stay vigilant and adapt their strategies to navigate the market successfully.
The housing market data provided by the GBAR serves as a valuable resource for real estate agents and brokers, allowing them to make informed decisions and provide crucial insights to their clients in this ever-changing landscape.
ALSO READ: Massachusetts Housing Market Forecast 2023
Boston Housing Market Trends 2023
The Boston housing market continues to be a topic of interest, with August 2023 revealing some notable trends and developments. Despite challenges such as rising mortgage rates and decreased buyer demand, the Greater Boston area is experiencing steady price gains, creating a strong seller's market. Let's delve into the key insights from the latest housing market report by the Greater Boston Association of REALTORS® (GBAR).
In August 2023, the Boston housing market experienced a slowdown in home-buying activity due to several factors including a decline in inventory, higher mortgage rates, and consumer anxiety about the economy and job market. Despite this, median selling prices for both single-family homes and condominiums remained strong, showing a 5-6 percent increase on an annual basis.
Sales Trends
The sales of single-family homes saw a decline of 25.9 percent compared to August 2022, dropping from 1,471 sales to 1,090 in August 2023. Similarly, condominium sales decreased by 23.7 percent over the last 12 months. August 2023 witnessed the slowest sales for single-family homes since August 2010 and the weakest for condos since August 2000.
Market Analysis
The market is currently in a holding pattern due to slow new listings and economic uncertainty. The lack of new listings has resulted in stale inventory and has led to hesitancy among buyers. Despite the decrease in sales, home values have remained strong, with median prices for single-family homes and condos reaching new record highs in August.
Price Trends
Median selling prices for both single-family homes and condominiums have shown consistent appreciation over the past year. Despite rising mortgage rates, steady price appreciation was observed as buyers competed for a limited number of properties for sale. Sellers have taken advantage of the low inventory, often selling their properties for more than the asking price.
Inventory Levels
As of the end of August, there was only a 1-2-month supply of properties for sale, significantly below the 5-6 months of inventory found in a normal, balanced market. Active listings of single-family homes and condos declined from the previous year, contributing to the low inventory levels. The lack of inventory, coupled with higher mortgage rates, has created indecision among both buyers and sellers.
The Boston housing market continues to navigate through challenges, adapting to changing economic conditions and consumer behavior. The trends observed in August 2023 highlight the delicate balance between supply, demand, and economic factors that influence the real estate landscape.
Boston Rental Market Trends
The Zumper Boston Metro Area Report analyzed active listings last month across the metro cities to show the most and least expensive cities and cities with the fastest growing rents. The Massachusetts one bedroom median rent was $2,261 last month. Cambridge ranked as the most expensive city in the metro with one bedrooms priced at $2,990 while Brockton was the most affordable city with one-bedrooms priced at $1,470.
The Fastest Growing Cities For Rents in Boston Metro Area (Y/Y%)
- Woburn had the fastest growing rent, up 18.6% since this time last year.
- Brockton saw rent climb 17.6%, making it second.
- Worcester was third with rent increasing 15.8%.
The Fastest Growing Cities For Rents in Boston Metro Area (M/M%)
- Melrose rent had the largest monthly growth rate, up 6.3%.
- Malden saw rent increase 6% last month, making it second.
- Worcester had the third largest rent price growth rate, climbing 5.4%.
Boston Housing Market Forecast 2023-2024
What are the Boston real estate market predictions? Keeping a finger on the pulse of the Boston housing market is essential for both prospective buyers and sellers. Let's examine the latest data and forecasts to gain insights into the current state of the market and whether it's a good time to buy a house in the Boston area.
Current Market Data
As of July 31, 2023, Zillow provides the following key data points for the Boston-Cambridge-Newton area:
- Average Home Value: The average home value in this area stands at $656,928, reflecting a modest increase of 0.2% over the past year.
- Days to Pending: Homes in this region typically go pending in a remarkably short time, averaging around 7 days.
- Median Sale to List Ratio (June 30, 2023): The median sale price in relation to the list price indicates a competitive market with a ratio of 1.023.
- Percent of Sales Over List Price (June 30, 2023): A significant portion of sales (64.1%) is occurring above the list price, underlining the strong demand in the market.
- Percent of Sales Under List Price (June 30, 2023): Approximately 27.5% of sales are happening under the list price, showcasing some opportunities for buyers.
These statistics paint a picture of a dynamic and competitive housing market in the Boston area, with properties often selling quickly and a substantial number of homes going above the asking price.
1-Year Market Forecast (July 31, 2023)
Looking ahead, the 1-year market forecast for the Boston housing market, as of July 31, 2023, indicates a 3.8% growth. This forecast suggests that the market is expected to continue to appreciate, albeit at a slightly slower rate compared to the previous year's 0.2% increase in home values.
Is the Housing Market in Boston Dropping?
Based on the available data and the 1-year market forecast, it does not appear that the housing market in Boston is currently experiencing a drop in prices. While the rate of price growth may have slowed compared to the previous year, the forecast suggests that the market is still on an upward trajectory, albeit at a more moderate pace.
Is It a Good Time to Buy a House in the Boston Area?
Whether it's a good time to buy a house in the Boston area depends on various factors, including your personal circumstances and long-term goals. Here are some considerations:
- Market Conditions: The Boston housing market is competitive, with homes often selling above the list price. Buyers should be prepared for multiple-offer situations.
- 1-Year Forecast: The 3.8% growth forecast suggests that home values are expected to appreciate in the coming year. If you're considering buying as an investment or for long-term residency, this could be a positive sign.
- Affordability: Assess your financial situation and affordability. Determine whether you can comfortably purchase a home in the Boston area given the current price levels.
- Personal Goals: Consider your long-term goals and whether owning a home in Boston aligns with them. Factors such as job stability and family plans may influence your decision.
In conclusion, while the Boston housing market remains competitive with properties selling quickly and often above the list price, the 1-year market forecast suggests continued growth. Whether it's a good time to buy a house in the Boston area depends on your specific circumstances and objectives. Conduct thorough research, consult with real estate professionals, and assess your financial readiness before making a decision.
Boston Real Estate Investment: Should You Invest in Boston?
Successfully investing in real estate — whether you are in Boston or anywhere else in the world — is all about correctly timing the market. Knowing when to enter the real estate market can often be a bit of a challenge. Should you invest in Boston real estate? Is Boston a Good Place For Real Estate Investment? Many real estate investors have asked themselves if buying a property in Boston is a good investment. You need to drill deeper into local trends if you want to know what the market holds for real estate investors and buyers.
Boston is a fairly walkable city in Suffolk County with a population of approximately 700,000 people, making the Boston housing market rather large on its own. It is a thriving city, which makes it the best location to buy an investment property at any point in time including the present. Since it contains around 80% of all residents of Massachusetts, it is certainly the first place that people choose to research, when they want to invest in the state.
The broader Boston Metropolitan Area or Greater Boston is home to more than four million people. Boston real estate has been one of the best long-term real estate investments in the nation. The Boston real estate market is dominated by rental properties and Airbnb is a great pick for starters. The city is a wonderful place to call home. People want to live in the city, yet the number of new homes being built is relatively low.
Boston's real estate market is vibrant, and plenty of buyers are offering more than the asking price when they love a property. Throughout the Greater area of Boston, numerous investment properties are waiting to be revitalized by a wise investor. But for most people, Boston is a high-priced real estate market, though it isn’t as expensive as Washington DC, San Francisco, or New York City.
Greater Boston is still an expensive place to buy a house, but the years of relentless price increases may be nearing an end. It’s too soon to know if this trend is a blip or if the Boston housing market heading toward some stability. However, new investors should always consider cheaper markets for investment. Because of the large number of students, and college and university faculty, it is a no-brainer for savvy investors to invest in a rental property in Boston.
Rental property in Boston is guaranteed to get a lot of demand from tenants – whether an apartment or a condo or a single-family home. Any investment property is likely to get rented out fast. Airbnb rentals are one of the best options for real estate investment in Boston. Let’s find out more about it.
Boston has been one of the hottest real estate markets in the country for many years. It is not just an expensive real estate market on the East Coast. It is one of the few in the region not expected to see significant declines. And there are areas we can expect to see significant appreciation due to the sheer demand for affordable housing with easy access to major arteries or public transit.
Boston is an old, East Coast city. We’ve already mentioned the height law and the challenges faced by getting anything approved even with the mayor behind it. Unfortunately, Boston’s entrenched bureaucracy limits the redevelopment of large garages and other major projects that could bring thousands of units to the Boston real estate market.
If it takes ten years (or more) for the Boston Harbor Garage to be redeveloped, and it is far from the only project on hold, then you can be certain to see high returns on any redevelopment project that creates more housing units within existing buildings. Whether this is converting warehouses into lofts or single-family homes into multi-family housing, if you don’t face major roadblocks, you’ll see a great return on the investment.
If you are looking to make a profit, you don’t want to buy the most expensive property on the Boston real estate market and expect to make a good profit on rents. Perhaps you are looking for a slightly different hold-over, an investment property in Boston that you might move into or sell at retirement in the future. Either way, knowing your profit potential and purpose is the first thing to consider.
Investing in Boston real estate will fetch you good returns in the long term as the home prices in Boston have been trending up year-over-year. Let’s take a look at the number of positive things going on in the Boston real estate market which can help investors who are keen to buy an investment property in this city.
Boston is Attractive to Millennials
Millennials are a market real estate agents want to cater to since they’re buying homes in mass. And Boston is considered one of the cities Millennials love. The challenge for Millennials is affording a market where the median home costs around $740,000. Yet the demand from young and old alike means there’s very little inventory, much less housing stock considered affordable.
Boston isn’t just attracting young people from across the country – it is also attracting immigration from around the world. The city has seen population growth every year since 2004 in part because of the influx of immigrants attracted to healthcare, biotech, and educational jobs here.
Millennials and older adults alike are choosing to spend more on an apartment, condo, or house to avoid spending hours each week commuting. It is seen as an investment in their quality of life. This explains why downtown Boston is seeing price increases far higher than the rest of the Boston metro area.
Downtown enclaves sell for much more per square foot than properties at the edge of town or in the suburbs; the price hit a thousand dollars a square foot recently. That’s expensive for the U.S. but half the price you’d pay for a comparable apartment in New York City. Ironically, the high price of real estate in NYC explains why many financial firms are expanding in the relatively cheaper city of Boston, home of the mutual fund.
Boston's Job Market Will Keep People Coming
Boston was ranked the best city in the U.S. for startups. A large number of world-class universities provide a large number of skilled workers, many of whom work in medicine, finance, and biotech. The constant creation of new jobs will continue to attract residents and help the city retain the ones it already has. The economy is dominated by services, which usually pay high wages and attract more and more job seekers. All these factors have created a hot housing market in Boston, dictated by both home buyers and tenants.
Guaranteed Real Estate Appreciation
Strong demand plus limited inventory and limited space to grow will guarantee appreciation of any property you buy in the Boston real estate market. Prices are going to appreciate in 2021 by 6-8%. This is only a continuation of the steady property increases seen since the 2008 property crash. This is partly because the market is so built-up already that land prices are high.
Then there’s the fact it can take a long time to get approval to build up. Boston’s mayor is facing flak for wanting to waive the building height rule just once. Ironically, the Boston shadow law that limits the height of buildings in the Boston housing market has the greatest impact on the downtown areas where people most want to see the tall apartment and condo towers built.
The increase in mortgage interest rates is putting pressure on home buyers, limiting what they can afford. This in turn is leading home builders to cut prices on new properties. According to the Washington Post, Boston home builders are cutting the price of properties on the market by 6%. If you have financing or the cash to invest in the Boston real estate market, you can’t pass up a deal like this.
Boston's Rental Market
The Boston real estate market and its environs include a whopping hundred universities, colleges, and trade schools. There are more than 150,000 college students in Boston and Cambridge alone. You could buy properties across the Boston real estate market and cater to students, and your market is so diverse that you’ll always see demand. Boston is landlord-friendly compared to markets like NYC. There is no limit on late fees.
You don’t have to provide notice before entering the apartment. The state doesn’t require rental licenses to become a landlord. There aren’t laws regarding re-keying or pets. A written rental agreement is only mandatory if your tenant is staying for more than 12 months. Evictions are allowed if they are not paying the rent, violating the lease, or breaking the law. You can start evictions two weeks after the non-payment of rent. Since evictions can take weeks, screen tenants well for any property in the Boston housing market.
Rents in the inner Boston Core hit 2800 a month. All those grad students, young single professionals, and highly paid power couples are bidding up the limited housing stock available. If you can find a reasonably affordable property in the Boston real estate market and convert it into multiple units or a more upscale clientele, you’ll enjoy significant cash flow from the property. Any future real estate investor in Boston should also have in mind that the expected rental income for both traditional rentals and Airbnb rentals is high.
The combined effect of high property prices and high rental income leads to a decent return on investment for Boston rental properties. The taxes here are high compared to the U.S. average but lower than in several other states in the area. The income tax rate is much lower than in New York, and property taxes are far lower than in New Jersey. Therefore, you’ll clear more here than in some of the other large Northeast markets.
Luckily for real estate investors in Boston who are interested in Airbnb rentals, they are fully legal in the Boston real estate market and are not even taxed at the moment. Recent discussions among Massachusetts lawmakers failed to result in an agreement on taxes to be charged on short-term rentals.
Latest Rental Market Statistics: According to RENTCafe, 51% of the households in Boston are renter-occupied, which is a significant population. More than 95% of the apartments fall in the range of $2,000 or more, which shows how high are the rents in Boston. As a rental property investor, it should be on your list of due diligence. Do the math and find out the best neighborhood & property that suits your investment goals.
The average size for a Boston, MA apartment is 812 square feet with studio apartments being the smallest and most affordable. 1-bedroom apartments are closer to the average, while 2-bedroom apartments and 3-bedroom apartments offer more generous square footage.
As of August 2023, the average rent for a 1-bedroom apartment in Boston, MA is currently $2,875. This is a 0% increase compared to the previous year. Over the past month, the average rent for a studio apartment in Boston increased by 4% to $2,395. The average rent for a 1-bedroom apartment increased by 3% to $2,875, and the average rent for a 2-bedroom apartment increased by 1% to $3,440.
- Two-bedroom apartment rents average $3,440 (a 4% increase from last year).
- Three-bedroom apartment rents average $3,600 (a 6% increase from last year).
- Four-bedroom apartment rents average $4,400 (a 10% increase from last year).
Boston Investment Properties: Where To Buy?
In any real estate investment, cash flow is gold. Boston is the top market where real estate investments are safe and have high rates of return. The Boston housing market sees steady population growth, faces limited supply, and can’t go vertical.
This means that those who invest in the Boston real estate market will see decent cash flow from nearly any property and guaranteed appreciation. Allston is an excellent neighborhood to buy an investment property in Boston as the median property price is well below the city level. Airbnb rentals are the best option for real estate investing in Boston.
Good cash flow from Boston investment properties means the investment is, needless to say, profitable. A bad cash flow, on the other hand, means you won’t have money on hand to repay your debt. Therefore, finding the best investment property in Boston in a growing neighborhood would be key to your success.
As with any real estate purchase, act wisely. Evaluate the specifics of the Boston housing market at the time you intend to purchase. When looking for the best real estate investments in Boston, you should focus on neighborhoods with relatively high population density and employment growth. Both of them translate into high demand for housing.
There are 65 neighborhoods in Boston. As we write this, Downtown Boston has a median listing price of $2.3M, making it the most expensive neighborhood. Commonwealth is the most affordable neighborhood, with a median listing price of $522,000. Some of the popular neighborhoods in Boston are Cambridge, Medford, East Boston, West Roxbury, Allston, Dedham, South End, Dorchester, Jamaica Plain, Roslindale, South Boston, Charlestown, Braintree, North End, and Hyde Park.
The best neighborhoods in the Greater Boston area for real estate investment are relatively affordable. They will offer a good rate of appreciation because of the influx of people moving there for affordable housing. They'll offer strong and rising rents in 2022 and beyond.
Roxbury has seen roughly 125 percent inflation over the past five years, a full 25 percent more price inflation than Boston as a whole. This is because Roxbury remains a relatively affordable area attracting people who are being priced out of rapidly gentrifying Boston. Affordable housing isn't the only reason why we can expect people to move here. For example, the Benjamin Franklin Institute of Technology is considering moving to an available site here.
Northeastern University is considering building student housing here, as well. When Blue Hill Avenue is upgraded, the area will have better bus service connecting it to the rest of Boston. Furthermore, Roxbury is slated for rapid development. For example, there are several opportunity zones here.
The biggest ones are near Ruggles and Roxbury Crossing. Note that the same trends are driving up rents and property values in Jamaica Plain and Dorchester, though we predict the greatest gains near the Nubian Square developments.
East Boston was once a cheap neighborhood because it was so close to the airport and factories. East Boston is in the middle of a building boom, as the old industrial waterfront gains office buildings and codon towers. Yet it has room for massive expansion thanks to the potential at Suffolk Downs.
This will create an explosion of new development, though demand for these properties will be weak for the next few months. This influx of new development is why the area has seen only a 105 percent appreciation over the past 5 years. These properties would be right off the Blue Line. Expect property values to skyrocket once there is regular public transit in the area.
East Boston is in sharp contrast to the slowly gentrifying South End, as young white professionals move into the area, driving up rents and property prices until they move somewhere else.
But it is attracting people who snap up 800-square-foot condos that may yet cost less than half a million dollars. Others snap up the new luxury apartments at Jeffries Point, because of its views of downtown Boston. Note that the area is connected to mainland Boston through the Sumner Tunnel.
Fort Point is a Seaport neighborhood. However, it is in the process of becoming a life sciences hub. Construction could turn the mostly vacated General Electric headquarters building into a life sciences campus. GE has moved its headquarters into one of the remaining buildings.
A former Proctor and Gamble Building is going to become another life sciences building. Expect rents in the area to rise along with the increasing average income in the area. Furthermore, the area is going to gentrify as new mixed-use projects that were recently approved are built. They won't just be on the waterfront anymore. They'll have several new parks, as well.
Here are the ten neighborhoods in Boston having the highest real estate appreciation rates since 2000—List by Neigborhoodscout.com.
- Roxbury Northeast
- Washington Park
- Central Square
- Central Maverick Square Paris Street
- East Boston
- Harbor View Orient Heights East
- Jeffries Point
- Roxbury Northwest
- Harbor View Orient Heights West
- Roxbury East
Buying or selling real estate, for a majority of investors, is one of the most important decisions they will make. Choosing a real estate professional/counselor continues to be a vital part of this process. They are well-informed about critical factors that affect your specific market areas, such as changes in market conditions, market forecasts, consumer attitudes, best locations, timing, and interest rates.
NORADA REAL ESTATE INVESTMENTS has extensive experience investing in turnkey real estate and cash-flow properties. We strive to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in many other growth markets in the United States. We can help you succeed by minimizing risk and maximizing the profitability of your investment property in Boston.
Consult with one of the investment counselors who can help build you a custom portfolio of Boston investment properties. Depending upon the availability, we can help you to find “Cash-Flow Rental Properties” located in some of the best neighborhoods of Boston.
Not just limited to Boston or Massachusetts but you can also invest in some of the hottest real estate markets for rental properties in the United States. Apart from the Boston real estate market, you can also invest in Jersey, City. The Jersey City housing market is seeing significant growth because it is close to New York City but isn’t NYC. It has several points in its favor, too, like a good job market and local amenities.
Renters and buyers alike are taking notice and helping to make Jersey City the fastest-growing metropolitan area in the state. Jersey City has been busy redeveloping old neighborhoods, encouraging a mix of new retail, luxury housing, and affordable housing. Jersey City is notable for the major redevelopment on the waterfront, known as the Shore, while properties there enjoy a great view of Manhattan.
Jersey City takes things one step further and is setting up a “Friendly Building Program”, where developers build entire buildings were renting through AirBnB is allowed. This is an innovative development in the Jersey City housing market. All you have to do is fill up this form and schedule a consultation at your convenience. We’re standing by to help you take the guesswork out of real estate investing. By researching and structuring complete Boston turnkey real estate investments, we help you succeed by minimizing risk and maximizing profitability.
Let us know which real estate markets in the United States you consider best for real estate investing!
This article shouldn't be used to make real estate or financial decisions. Some of this article's information came from referenced websites. Norada Real Estate Investments provides no express or implied claims, warranties, or guarantees that the material is accurate, reliable, or current. All information should be validated using the below references. Norada Real Estate Investments does not predict the future US housing market. This article educated Boston real estate investors. Buying a rental property needs research, planning, and budgeting. Not all investments are good. Always do research and consult a real estate investment counselor.
References
Market Data, Reports & Forecasts
https://www.gbreb.com/
https://www.gbreb.com/GBAR/Housing-Market-Data/
https://www.zillow.com/boston-ma/home-values
https://www.realtor.com/realestateandhomes-search/Boston_MA/overview
https://boston.curbed.com/boston-market-reports
https://www.bostonmagazine.com/property/2018/01/24/boston-zillow-housing-crisis
Pre-COVID stats
https://www.bostonmagazine.com/property/2019/01/31/expensive-housing-market/
https://www.bostonmagazine.com/property/2020/03/16/boston-home-prices-doubled/
https://www.redfin.com/city/1826/MA/Boston/housing-market
Landlord friendly & Rental Statistics
https://www.avail.co/education/laws/massachusetts-landlord-tenant-law
https://www.rentcafe.com/blog/renting/states-best-worst-laws-renters
https://www.rentjungle.com/average-rent-in-boston-rent-trends/
https://www.rentcafe.com/average-rent-market-trends/us/ma/boston/
Reasons to Invest
https://nextcity.org/daily/entry/boston-mayor-waive-building-height-rule-park
https://www.fool.com/taxes/2017/10/09/7-states-with-the-highest-income-tax.aspx
https://www.bostonmagazine.com/property/2018/05/30/boston-renting-crisis
http://charlesgaterealty.com/2018/11/29/boston-strong-the-fast-growing-boston-housing-market
https://www.forbes.com/sites/ellenparis/2018/01/29/2018s-housing-market-looks-good-unless-youre-a-first-time-millennial-buyer/#78138a011885
Bureaucracy
https://boston.curbed.com/boston-development/2018/2/22/17037854/boston-building-height-limit
The Best Neighborhoods for Boston Real Estate Investment
https://www.bostonmagazine.com/property/2020/03/16/boston-home-prices-doubled/
https://boston.curbed.com/boston-development/2020/1/7/21051943/boston-neighborhoods-to-watch
https://www.boston.com/news/local-news-2/2020/07/09/boston-ranked-third-most-gentrified-city
https://www.bostonglobe.com/2020/07/27/business/plans-major-project-along-fort-point-channel-are-moving-ahead/
